[Aug 25, 2026] Free CIPS Level 4 Diploma in Procurement and Supply L4M5 Official Cert Guide PDF Download
CIPS L4M5 Official Cert Guide PDF
NEW QUESTION # 184
A purchasing manager is having a negotiation with a supplier to extend the duration of the contract. In order topersuade the supplier to cut the cost by 10%, she promises to shorten the payment period from
45 days to 30 days for each delivery. The supplier's representative does not agree the offer and clearly states that his proposed price is already lower than the market price. The purchasing manager has used which type of power?
- A. Informational
- B. Coercive
- C. Expertise
- D. Reward
Answer: D
Explanation:
In the scenario, to exchange cost cutting, the purchasing manager promises to 'reward' supplier shorter payment period. This is an example of reward power, which results from one person's ability to compensate or reward another for compliance.
The reward does not need to be money, but could be introduction to other buyers in the group, positive references, agreement to trial new product, quicker payment or indeed any other variable that the buyer knows is attractive and valued by the supplier.
NEW QUESTION # 185
When considering a new supply source for a product, a procurement professional reviews supplier quotations before negotiation. Which of the following is a direct cost in the supplier's quotation?
- A. Insurance for production machinery
- B. Rent for the supplier's premises
- C. Metal used in the product
- D. Wages for the supplier's sales department
Answer: C
Explanation:
Direct costs are those directly attributable to the production of a unit - such as raw materials, components, and direct labour. Here, the metal used is a clear direct cost, as it varies with production output. Rent, insurance, and sales wages are indirect (overhead) costs, which must be allocated across products.
Understanding this distinction is vital in negotiations, since direct costs are easier to challenge for efficiency gains, while indirect allocations may be arbitrary. Buyers with clear knowledge of cost breakdowns can negotiate more effectively, avoiding inflated pricing.
Reference: CIPS L4M5 (2nd ed.), LO 2.2 - Cost analysis: direct vs indirect costs in supplier quotations.
NEW QUESTION # 186
Fast & Easy Limited, a global fast food retailer, is in a negotiation with its major meat supplier. The supplier is asking for a 2% price increase, which Fast & Easy is strongly resisting. The supplier justifies this increase by stating that currency fluctuations, an unstable economic climate, and rising transport costs have necessitated this increase. Which influencing tactic is the supplier using?
- A. Rational persuasion
- B. Inspirational appeal
- C. Personal appeal
- D. Coalition
Answer: A
Explanation:
This question is a duplicate of Question 22, and the answer remains Rational persuasion (A). The supplier's use of economic justifications aligns with rational persuasion, an influencing tactic defined by CIPS as presenting logical, fact-based reasons to secure agreement.
NEW QUESTION # 187
Which of the following would cause a demand curve for a good to be price inelastic?
- A. The consultancy service
- B. There are a great number of substitutes for the good
- C. The necessary goods
- D. The luxury goods
Answer: C
Explanation:
Essential goods and services such as electricity, fuel, basic food stuffs, commuter transport and habitual products such as tobacco, alcohol and sugar-based drinks are often sited as facing a relatively inelastic demand curve. This means when the price goes up, the quantity demanded does not decrease very much and so they are often the target of government taxation.
LO2, AC 2.2
NEW QUESTION # 188
Procurement gets involved in negotiating purchase requisitions only when there is a value analysis to ensure that only value-adding aspects are included. Is this statement true?
- A. Yes, value analysis is the single most important responsibility of procurement in the processing of repeat requisitions
- B. No, value analysis is a very technical process that requires the expertise of engineering and financial analysts
- C. No, purchasing can negotiate other details of the purchase requisition even where value analysis is absent
- D. Yes, the role of purchasing is to add value to the purchase, and therefore every purchase requisition must go through a team value analysis
Answer: C
Explanation:
Procurement can negotiate various aspects of a purchase requisition even without a formal value analysis.
While value analysis can enhance cost-effectiveness, procurement professionals often negotiate on pricing, terms, and conditions to add value independently of value analysis, as per CIPS's guidelines on procurement flexibility in negotiations.
NEW QUESTION # 189
Which of the following is a variable cost?
- A. Loan repayments
- B. Packaging
- C. Insurance
- D. Rent
Answer: B
Explanation:
Variable costs change in proportion to production volume, such as packaging, raw materials, and delivery.
Fixed costs (rent, insurance, loan repayments) remain constant regardless of output. Recognising the difference is crucial when negotiating supplier pricing, as variable costs are often more open to tradeable adjustments (e.g., bulk discounts). Buyers who understand cost structures can challenge inflated fixed allocations or negotiate on genuine variable elements. This knowledge is vital in price breakdown discussions and in cost-modelling negotiations.
Reference: CIPS L4M5 (2nd ed.), LO 2.2 - Cost structures: fixed vs variable costs in negotiation preparation.
NEW QUESTION # 190
According to Fiona Dent and Mike Brent, which of the following are characteristics of Push approach? Select TWO that apply.
- A. Seeking commitment
- B. Collaborative
- C. Inspirational
- D. Directive
- E. Persuasion
Answer: D,E
Explanation:
According to the book 'Influencing: Skills and techniques for business success' by Fiona Dent and Mike Brent, there are two major influencing styles. Push tends to be directive. It tells, and is clear and resolute, but needs to be employed in situations where firmness is required because of difficulties that exist or weakness is evident.
Pull is more participatory and collaborative. It seeks to incorporate everyone's perspective. It can appear wishy-washy if not skilfully employed. That approach should be followed which is most likely to secure commitment and not mere compliance.
The two divisions can be further divided into four style categories: directive; persuasive reasoning; collaborative - team oriented, people oriented to inspire them with a vision. The directive style relies on your expertise and reputation being respected by others, and where there really does seem to be one answer. It is "I" driven whereas persuasive reasoning is more "we" and issue driven. Directive styles can make the user appear as "a bull in a china shop"; persuasive reasoning can be portrayed as tough guy.
Collaborative influencing takes the "we" element further and seeks to mobilise everyone's ideas in a journey of discovery. It may have the flavour of "I'm your best friend", which may not go down too well. Visioning style is concerned to stir people's emotions in support of achieving an objective. This last one has been used by demagogues to stir people's hearts and minds for evil purposes as well as good.
A useful table offers the benefits, problems, words and body language associated with each style along with advice on when to use and when to avoid each. Cases and exercises illustrate these styles.
Empathy comes in for extended treatment with the definition of "standing in the other's shoes". This does not necessarily happen just intuitively, and therefore before a specific influencing effort there should bean intense effort to think about the other person or persons and to sense what it might feel like to be them - their hopes, fears, concerns, what turns them on, what turns them off, where are they coming from.
NEW QUESTION # 191
The sourcing manager has decided to adopt an adversarial style of negotiation to take advantage of the buyer's greater bargaining power over the suppliers. In what other circumstances should an adversarial relationship be used?
- A. When the issues concerned are non-negotiable, for example, health and safety commitments
- B. In all forms of negotiation as each party is always trying to gain advantage over the other
- C. When the supplier is likely to respond with further concessions to maintain a long-term relationship
- D. In a monopoly market as the supplier will respond by conceding quantity discounts
Answer: A
Explanation:
An adversarial style is appropriate when issues are non-negotiable, such as health and safety commitments (D). In these scenarios, compliance is required without compromise, and a firm stance may be necessary. This aligns with CIPS guidance, where adversarial tactics are used in non-negotiable contexts to enforce strict standards.
NEW QUESTION # 192
Which type of question should be used to receive affirmation on statement?
- A. Open
- B. Narrow
- C. Leading
- D. Closed
Answer: D
Explanation:
:
Different questioning styles can be used to elicit desired responses:
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NEW QUESTION # 193
Which of the following are typical characteristics of activity-based costing (ABC) method? Select TWO that apply.
- A. Limited understanding of true costs incurred
- B. ABC has tended to over cost products on long runs and under cost those on short runs
- C. ABC provides the information required to take action and realise improvements
- D. Costs are allocated based on volume
- E. Variable and all related overhead expenses are specifically assigned to a business activity
Answer: C,E
Explanation:
Activity-based costing is an alternative approach to traditional absorption costing. The characteristics of these two methods are illustrated in the graph below:
Graphical user interface, text, chat or text message, website Description automatically generated
NEW QUESTION # 194
"A negotiation ends once the meeting finishes." Is this statement true?
- A. Yes, because both parties have the emotional intelligence to proceed
- B. No, terms should continue after the meeting until signed by the supplier only
- C. No, best practice includes reflection after the meeting as part of the process
- D. Yes, provided the meeting results in a win-win outcome
Answer: C
Explanation:
Negotiations do not end at the meeting; they continue through reflection, documentation, and post-negotiation review. Best practice involves assessing whether objectives were met, capturing lessons learned, and ensuring written confirmation of terms. Without this, misunderstandings or missed improvements can occur. Reflection allows organisations to continuously strengthen negotiation strategies and build learning cycles.
Reference: CIPS L4M5 (2nd ed.), LO 2.2 - Post-negotiation review and reflection as part of the negotiation process.
NEW QUESTION # 195
"Finding the middle ground between buyer and supplier is a satisfactory way to complete contract negotiations." Is this statement correct?
- A. No, because the other party may take advantage if you move position
- B. Yes, because the buyer will always move further than the supplier
- C. No, because it will damage your credibility in negotiations
- D. Yes, because both parties get as close to their result as possible
Answer: C
Explanation:
While compromise seems fair, it often erodes credibility and weakens long-term negotiation outcomes.
Skilled negotiators avoid "splitting the difference" automatically, since it signals weak preparation and can encourage exploitation in future talks. Instead, agreements should be built on objective value, data, and tradeables. Compromise has a place, but reliance on it damages strategic positioning. CIPS stresses integrative or principled negotiation over simplistic middle-ground settlements.
Reference: CIPS L4M5 (2nd ed.), LO 1.1 - Dangers of compromise and importance of principled negotiation.
NEW QUESTION # 196
Which of the following are effective approaches when procurement professionals negotiate with monopoly suppliers?
1. Delaying payment with monopoly suppliers as long as possible to increase bargaining power
2. Setting up stronger BATNA
3. Engaging in the negotiation with a distributive approach
4. Eliminating requirements in the specification that prioritises monopoly suppliers
- A. 3 and 4 only
- B. 1 and 4 only
- C. 2 and 4 only
- D. 2 and 3 only
Answer: C
Explanation:
:
In most commercial negotiations with monopolistic organisations, one can expect that in general they will have far greater bargaining power - you will need them more than they need you. There BATNA is stronger in the short run, but over time their power can be challenged effectively.
Ways of dealing with monopoly suppliers include the following:
Making yourself an attractive buyer
Seeking out alternatives / substitutes in a private or public manner
Designing out the requirement that forces you to go to the monopoly suppliers, or seek to make the product, or threaten to make it yourself if feasible Lobbying government or campaigning, as part of an industry or trade body, for a reduction in barriers to entry that support the monopoly
NEW QUESTION # 197
Which of the following are most likely to be sources of conflict that can emerge from the content of commercial negotiations? Select TWO that apply.
- A. Cultural differences
- B. Contract governing law
- C. Framework arrangement
- D. Payment terms
- E. Requisition
Answer: B,D
Explanation:
There are multiple sources of divergent positions that can arise in situations where money is exchange for goods and services. There are 2 different types of sources. Those that arise from the content or subject matter of the negotiation (what is being negotiated) and those that arise from the process of negotiation (how it is being negotiated).
Sources of divergent position - the content of negotiation:
Table Description automatically generated
Cultural differences are the source of conflict in the process of negotiation.
Requisition is an internal document raised by user or store to communicate to procurement the need to buy the product or service specified. This is merely a internal document.
Framework arrangement is a rather loose set-up, without any legal standing. It usually occurs when an organisation has decided for itself to limit the number of suppliers it is willing to work with and, through a purely internal process, sets up an approved list of such suppliers.
LO 1, AC 1.1
NEW QUESTION # 198
Which of the following is considered a weakness of a 'dealer' style negotiator?
- A. May be too assertive
- B. Focuses on the facts and not the people
- C. May shift position quickly
- D. Very precise
Answer: C
Explanation:
Explanation
A useful and simple shorthand for preferred negotiation styles is summarised by four simple descriptor:
'warm', 'tough', 'logical' and 'dealer', which can beapplied to describe individuals' dominant preferred style in most circumstances.
Warm - a people person
Tough - a hard-nosed negotiator
Logic - a numbers person
Dealer - a trader who loves bargaining
Strengths, weaknesses of dealer style are described below:
Table Description automatically generated
LO 2, AC 2.4
NEW QUESTION # 199
Which of the following will positively affect reputational strength of an organisation? Select TWO that apply.
- A. Weak internal coordination
- B. Adopting out-of-date technology
- C. Great gap between reputation and reality
- D. Strong customer focus
- E. High ethical standards
Answer: D,E
Explanation:
Explanation
In a globalisedcommercial world characterised by dynamic market and multiple companies competing for business, a positive corporate reputation can be an enormous asset. Reputational strength in one organisation might be based on some or all of the following characteristics:
- Quality of products or services
- Low cost/high value for money
- High ethical standards
- Reliability
- Cutting-edge technology
- Strong customer focus
- Engineering excellence
LO 1, AC 1.4
NEW QUESTION # 200
From the principled point of view about negotiation environment, which of the following is a true statement?
- A. Advantage gained from uncomfortable negotiation environment is likely to last long after the negotiation
- B. There is no ideal negotiation environment in real life
- C. The room layout can be seen as a source of tactical advantage
- D. Home advantage should not be exploited to win a temporary advantage
Answer: D
Explanation:
Explanation
From a principled point of view, the focus of negotiation is on resolving the issue and not on winning temporary advantage over TOPthrough exploiting home advantage. From the principled point of view, the location and room layout should not be viewed as a source of tactical advantage and should not be used to try to gain advantage over TOP or unfairly influence them in the meeting room.
From a pragmatic point of view, not all of these elements in the ideal negotiation environment may be feasible, so the host may have to make compromises and explain these to TOP.
From a distributive point of view, the host will seek to create an advantage for themselves either explicitly or more subtly. It is arguable that any advantage gained through intentionally creating an uncomfortable environment to put short-term pressure on TOP is likely to be short-lived as TOP will likely reflect on this laterand seek means to get even.
LO 2, AC 2.4
NEW QUESTION # 201
Open questions can be a useful communication tool in negotiations. Is this statement correct?
- A. Yes-they can be used to gain more in-depth information and build rapport
- B. Yes-they can be used to get explicit confirmation over pricing and exact profit margins
- C. No-they can lead to misunderstandings due to their probing nature
- D. No-they can lead to complex answers that do not benefit the negotiation
Answer: A
Explanation:
Open questions ("how/why/what...") encourage the other party to share information, interests, and constraints, supporting rapport, listening, and exploration-key to persuasive dialogue and integrative outcomes. Closed questions check facts; open ones surface interests.
Reference: CIPS L4M5 (2nd ed.), LO 3.2 - Questioning techniques (open/closed/probing), listening and rapport in persuasion.
NEW QUESTION # 202
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